Former NBN CTO enjoys broadband challenge in Hong Kong

Gary McLaren was chief technology officer at NBN Co and a member of its executive committee through its earliest and most turbulent times.

He now holds the same title, but with another broadband network provider — a challenger that is poised to overtake the incumbent, and all without any regulatory ‘levelling’ of the playing field: Hong Kong Broadband Network (HKBN).

McLaren joined NBN in September 2009, four months after the then Labor government announced plans for its creation. He left in mid-2014, took a year off and joined HKBN in June 2015.

“Today Hong Kong Broadband is in the position of being the first challenger carrier anywhere in the world to go to number one in terms of fixed residential broadband,” McLaren told Computerworld Australia.

“We have just on 38 per cent market share [by households connected to all fixed broadband technologies]. The incumbent [PCCW] has 45 percent.” HKBN is on record as saying it expects to overtake PCCW in 2018.

“I met the CEO of Hong Kong Broadband in 2012 in Auckland and I was so impressed by what they had achieved,” the CTO said.

“Even by that stage [it had a network that was] wholly owned, wholly self-built, no infrastructure leased from any of the incumbents. And they had shaken up the whole Hong Kong market for broadband delivery.

“They had created the gigabit leading position off the back of a new entrant challenger carrier. I remember thinking this is exactly what we needed to have [in Australia] — challenger carriers able to challenge the incumbents, drive investment and get better broadband outcomes.”

McLaren is also putting is own money into the company: His business card describes him as “chief technology officer and co-owner.”

He explained that the Hong Kong Stock Exchange listed company operates an employee share scheme in which about 10 per cent of the equity is held by just under 10 per cent of its 2900 employees. “It’s not a share option scheme, you have to put your savings in [to buy shares],” he said.

HKBN started off as a long distance callback operator in 1992 and started building its own residential broadband network in 2000. “It tried a few different technologies, but it could not get access to the incumbent’s infrastructure: There was no open access policy in Hong Kong,” McLaren said.

“Today we have fibre to pretty much all of Hong Kong with coverage of 80 per cent of Hong Kong households. We have one third of those on G-PON [fibre to the home]. For the other two thirds we use Cat-5 Ethernet for the last 100 metres.

“We are gaining market share quickly; we are accelerating our growth with the addition of English Premier League to our over the top services in partnership with LeEco and with the local TV company TVB. We are packaging up the OTT content and selling it as a bundle with broadband.”

McLaren does not want to be drawn into comparisons with Australia, saying that the two countries have very different geographies and cost structures, but he traces the roots of the current situation in Australia to 2003 when the development of DOCSIS had enabled operators of HFC (hybrid fibre-coaxial) networks to compete with telcos’ copper networks in the provision of broadband services.

“The biggest issue Australia missed was not to create infrastructure competition after Optus lost the ‘pay TV wars’ to Telstra and Foxtel back in the early 2000s. The ACCC recommended that Foxtel should be separated from Telstra,” he said.

“All over the world regulators saw that DOCSIS could make HFC a broadband challenger to ADSL and jumped on it. The ACCC saw this. They called it out but it was the political angle that kept Foxtel in Telstra.”

Copyright © 2016 IDG Communications, Inc.

Shop Tech Products at Amazon